Home groan: Slump still on - Business

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Aug. 22, 2007
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Home groan: Slump still on

Latest data show housing in LV yet to hit rock bottom

By HUBBLE SMITH
REVIEW-JOURNAL

Housing in Las Vegas
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The Las Vegas housing market continued to slide in July as both new home permits and closings fell dramatically from a year ago, Home Builders Research reported.

The firm counted 1,724 recorded sales of new homes during the month, down nearly 40 percent from July 2006. The 859 new home permits pulled in Las Vegas, North Las Vegas, Henderson and Clark County are down 45.2 percent from a year ago.

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"There are still some national press stories implying that the new home segment is still overbuilt," Dennis Smith of Home Builders Research said. "At least in Las Vegas, we strongly disagree."

The median price of a new home rose less than 1 percent from a year ago to $326,750. Smith said the price increase has to be carefully interpreted because 18 percent of recorded sales in July were mid-rise and high-rise condominiums with a median price of $535,000.

The existing home segment also continues to post double-digit sales declines. The 2,101 recorded resales in July represent a 40.2 percent drop. The median resale price fell 4.2 percent to $278,000.

"There's not a lot to say. It's more of the same," housing analyst Larry Murphy of Las Vegas-based SalesTraq said. "The picture does not look any better and continues to go down a little."

Murphy shows prices continuing to slide a bit for new and resale homes. He's got the new home median price at $327,790 in July, down 2.6 percent from a year ago, and the existing home median price at $276,500, down 4.3 percent.

New home closings are off 40.1 percent at 1,689 and existing home closings fell 35 percent to 2,232 in July.

"So the news continues to be negative," Murphy said. "It's not crashing, just continuing a gentle slide. We will know when we hit bottom when two things happen: inventory quits climbing and prices quit sliding. That did not happen in July."

Smith said it's amazing how the subprime mortgage crisis has tacked onto the change in demand for housing in Las Vegas. The mortgage industry started fading six months ago, but now it's giving the appearance of almost completely shutting down, he said.

"It'll get worse. I don't think anybody except people in the industry and down on Wall Street understand the ramifications at this time," Smith said. "The Feds are starting to see it because they lowered the (discount) rate last week."

Anybody's who's got cash is really in a buyer's market, but not many people do, he said.

Robin Camacho of Direct Access Lending said foreclosures and short sales in which the bank is willing to take less than the balance owed on a home have doubled as a percentage of listings since the beginning of the year.

In February, there were 995 single-family residences listed as foreclosure or short sale, about 8.5 percent of total inventory. By August, the number had grown to 2,598, roughly 17 percent of homes on the Multiple Listing Service, Camacho found in her research.

Nobody likes to hear about people losing their home to foreclosure and having their credit ruined, but it has become apparent that many of those people ignored caution and continued with their "reckless use of paper equity wealth," Smith said.

Since early 2004, there were warnings about the ramifications of adjustable-rate mortgage payments, increasing debt loads and the potential for changing market conditions, he said.

"But the greed factor that drove normal people to a level of arrogance and get-rich-quick dreams overwhelmed any caution," Smith said. "They saw a friend, a relative or a neighbor making a bundle by flipping property and thought, 'I can do this. Getting overextended won't happen to me because our housing market is too strong. My equity will continue growing.' "

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. VegasBob wrote on September 16, 2007 12:43 AM: Willy my main man...brother...with home values going in to the crapper...the whole point is YOU DONT MAKE ANY MONEY BUYING REAL ESTATE NOW!!!! You wait my financial little genuius until the prices get back to pre 2004 levels then you look over the carnage and pick the bones of the dead and dying! That's called savvy dealing. As for the financial masters of the universe who bouhgt before the run up...well there imagined "50-60-70% profits" just went by... by! bob wrote on August 24, 2007 08:48 AM: Tina, so you hope a former realtor or loan officer takes your Job (or job of a family member)? You make no sense lol. Also, I see realtors and loan officers just like any other person in sales who works on commission. Most are not the problem. I see an ignorant or predatory borrower as the problem. willy wrote on August 23, 2007 01:08 AM: Ok negative geniuses, say I buy into your theory that housing is going down 30-50% or whatever crazy number you come up with. How do you make money on that??? Fact is that it is next to impossible to make money on a real estate drop from here. Most mortgage companies and homebuilders are priced for disaster. So for most people that say with glee that prices are going way down all that can create is a nice ego boost if you ever get the chance to say you are right. However if you are wrong I'm sure we'll never hear from you then. Get realistic. The last speculators and greedy people as mentioned in the articles are the ones who got burned. Those who took out loans impossible to cover are getting burned. Those who bought in 2004 and before are WAY ahead of the game. So that means a majority of those who own homes in the Valley aren't crying over their 10-20% drops from the peak. Maybe the market goes down another 5-10%, wouldn't be surprising with all the doom and gloom out there. However saying 30-50% more is really going out on a limb, but then again when you have no real financial stake in it you can pretty much say whatever you want and act like an expert right? Vegas Bob wrote on August 22, 2007 09:59 PM: Holy Dumpster Batman! Positive Outlook has crawled out of his cardboard box long enough to commnent on the current Real Estate Scene. Still delusional Positive sad to say, Vegas radar has nailed your coffin shut! Or should I say cardboard box, Posiitve. You and your shill collegues have used up all the excuses, all the hype and all the BS. Now you arefaced with the hard reality of a wall to wall real estate meltdown. Even the wideboys at GLVAR have come to accept the bubble has burst and now can only sit and watch the carnage. To quote Mr. T I pity the Fool, in this case the fool is you Positive, I pity you, I pity you! Vegas Radar wrote on August 22, 2007 08:01 PM: The sky is falling if your Countrywide The sky is falling if you want a loan over 417K The sky is falling if you counted on the make-believe equity in your home The sky is falling if work in anything associated with real estate Buh-Bye tina wrote on August 22, 2007 07:54 PM: The "Innocent people" are the ones that didnt make big fat commissions off of the sales and Refi's. Now that 30,000 + people are on the market for jobs, I hope they take YOURS. You mean-spirited greedy bastards. Karma baby, karma.... Cheap Homes wrote on August 22, 2007 07:09 PM: Michelle, well these people don't have to wait, as they can buy now with all the homes on the market! Duh. If they still cannot afford a home here (which is near the national average), they do not belong here. They should go to other areas in the country where housing is cheaper! So if you really want to "own", you have options. If you want to cry about affordibility, take a trip to California, and then let us know how you feel about Vegas prices. Remember, you can move to where it is cheaper and there you will "own" a home and feel some American Dream. Positive Outlook wrote on August 22, 2007 05:45 PM: OH MY GOD!!! Run for the hills...the sky is falling!!! Vegas Radar wrote on August 22, 2007 05:29 PM: Where is Positive Outlook these days? OH, she must be re-reading my old post about "credit markets over-correcting" ROFLMAO!!!! Michelle wrote on August 22, 2007 04:41 PM: This is an unfortunate mess for people who have waited their entire lives to own a piece of the "American Dream." Those who have worked hard and saved have been priced out of the market. As a native Las Vegan, I blame out-of-towners for driving up the prices and criminals for stealing the the "Dreams!" Read All Comments